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Friday, April 1, 2016

Perry: Our broken military procurement system

Every two years, apparently, the Department of Finance announces that Canada’s system for procuring military equipment is under-performing.

The 2016 budget had little to say about defence, but what it did say was depressing. A total of $3.716 billion in funding that was set aside for capital projects is being removed from the fiscal framework over the next five years, and reallocated out into the future. The funding, intended to buy ships, aircraft and vehicles for the military in the short term, has been shoved out into the distant future, to be used between 2021 and 2045.

Sadly, this is a reoccurring theme. The same thing happened in 2012 and again in 2014. In those years, the Harper government similarly pushed that exact same pot of funding into the future. In total, the Tories deferred $6.7 billion in funding pledged for major defence purchases. At the time, there was significant speculation then-prime minister Stephen Harper had done so as part of the effort to balance the budget.

Since Prime Minister Justin Trudeau’s “modest” deficits will total $113 billion over five years, this shifting of procurement funds is certainly not part of an effort to curb spending. Rather, it reflects a system of procuring defence equipment that simply cannot deliver on schedule. The funds can be moved largely because they “cannot be spent due to unforeseen delays in planned projects.” In essence, no matter how badly the equipment is needed, the government just isn’t able to get this money out the door on schedule.

he Budget Plan contains at least a partial explanation why this is. The cumulative military recapitalization plans outlined by the Martin and Harper governments were extremely aggressive. They were intended to procure tens of billions worth of new equipment in a few years. But adhering to that schedule would have required a major expansion of the procurement system’s capacity.

Instead, a procurement workforce that lost a huge amount of capacity during the 1990s grew only marginally during the 2000s, and was then hammered by Harper’s attempts to balance the books. At the same time, longstanding problems defining and communicating military requirements and costing projects persisted, and new, more onerous policies regarding investment planning and managing major projects were introduced, which meant that procuring military equipment took more time and effort. Major problems with the procurement of military helicopters and fighter jets flagged by the auditor general contributed to a loss of trust in the bureaucracy, resulting in new governance regimes that added further steps to the procurement process. As a result, the aggressive schedules proved increasingly unrealistic.

This all drives home the importance of the commitment the budget makes to improving the process for making major defence purchases over the coming year. No matter what form the revised defence policy takes, it will require further, significant spending on military re-capitalization. Turning the available funding into actual military equipment requires sustained attention from the government.

The creation of an ad hoc cabinet committee for major procurement files is a positive indication of a commitment to improve the system. This needs to be matched by increasing the capacity of the system by growing the workforce and increasing its level of expertise. As part of the defence policy review, our true priorities need to be identified and have resources concentrated on moving them forward.

Finally, few areas of government stand to benefit more than defence procurement from the government’s pledge to reorient toward actual outcomes. Inordinate focus is placed at present on complying perfectly with policies interpreted to demand zero risk to the government, rather than the actual acquisition of military equipment.

If this situation doesn’t change, the 2018 budget will be telling the exact same story of a defence procurement system unable to deliver what Canada needs.

National Post

Dave Perry is a senior analyst at the Canadian Global Affairs Institute.